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AUTHORITY AND PURPOSE <br /> The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. The <br /> proceeds of the Bonds will be used to finance various street and water main repair and <br /> replacement projects within the City. The composition of the Bonds is as follows: <br /> Project Costs' $698,250 <br /> Issuance Costs 17,325 <br /> Allowance for Discount 9.425 <br /> Total Series 1998A Bonds $725,000 <br /> Includes engineering, administration and contingency. <br /> SECURITY AND FINANCING <br /> In addition to its general obligation pledge, the City pledges special assessments levied against <br /> benefited property. Special assessments in the principal amount of $180,900 are expected to <br /> be filed on or by September 1, 1998 for first collection in 1999. All assessments will be spread <br /> over 15 years in equal annual principal and interest installments with interest charged on the <br /> unpaid balance at a rate of 6.70%. The balance of debt service not paid by these special <br /> assessments is expected to be paid from an annual general ad valorem tax levy of <br /> approximately $53,830. The City will make its first levy for this issue in 1998 for collection in <br /> 1999. The February 1, 1999 interest payment will be made from a temporary transfer of City <br /> funds. Thereafter, special assessments and levy collections will be in the amount sufficient to <br /> pay 105% of the interest coming due August 1 in the year of collection and the principal and <br /> interest coming due February 1 of the following year. <br /> FUTURE FINANCING <br /> The City does not anticipate any additional borrowing for at least the next 90 days. <br /> LITIGATION <br /> The City is not aware of any threatened or pending litigation affecting the validity of the Bonds <br /> or the City's ability to meet its financial obligations. <br /> LEGALITY <br /> The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP of <br /> Minneapolis, Minnesota as Bond Counsel. Bond Counsel has not participated in the <br /> preparation of this Official Statement except for guidance concerning the following section, "Tax <br /> Exemption, and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel <br /> has not examined nor attempted to examine or verify, any of the financial or statistical <br /> statements, or data contained in this Official Statement, and will express no opinion with <br /> respect thereto. A legal opinion substantially in the form as set out in Appendix I herein will be <br /> delivered at closing. <br /> -4 - <br />